Oil advanced in New York, trimming the biggest weekly decline in a month, as signs Europe’s debt crisis is easing countered indications a proposed embargo on Iranian crude will be delayed.

Futures gained as much as 1.1 percent after borrowing costs for Spain and Italy fell at debt sales yesterday and European Central Bank President Mario Draghi said he saw signs of stabilization in the euro region. Oil also climbed after Nigerian labor unions said they will continue a strike that threatens crude exports from Africa’s top producer. Planned European Union sanctions on Iran may be postponed by six months to allow some countries to find alternative petroleum supplies, according to an EU official with knowledge of the talks.

“It’s a case of Iranian embargo versus a mildly risk-on attitude as a consequence of the so-far, so-good Italian and Spanish bond auction,” said Ric Spooner, a chief analyst at CMC Markets in Sydney. Nigeria “is certainly another aspect” that’s affecting the market, he said.

Crude for February delivery increased as much as $1.09 to $100.19 a barrel in electronic trading on the New York Mercantile Exchange. It was at $99.91 at 8:33 a.m. London time. The contract yesterday fell $1.77, or 1.8 percent, to $99.10, the lowest close since Dec. 30. Prices are down 1.4 percent this week, the biggest decline since the five days ended Dec. 16, and up 1.1 percent this year.

Brent oil for February settlement rose 92 cents to $112.18 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract’s premium to West Texas Intermediate futures was at $12.27, compared with a record $27.88 on Oct. 14.

‘Upside Skew’

The risk of higher oil prices in 2012 is “increasingly skewed to the upside,” according to Goldman Sachs Group Inc. Iranian crude embargoed by the European Union will be replaced by Saudi Arabian supplies while China will take the surplus, Jeffrey Currie, head of commodities research at the bank in London, said in a report today.

Crude shipments from OPEC will reach the highest level in almost a year amid rising exports from Libya, according to tanker-tracker Oil Movements. The Organization of Petroleum Exporting Countries will export 23.66 million barrels a day in the four weeks to Jan. 28, the most since Feb. 12, 2011, the Halifax, England-based researcher said yesterday in an e-mailed report. The figures exclude Angola and Ecuador.

Signs of Stabilization

The European Central Bank’s injection of cash into the financial system last month is lubricating credit markets and there are “tentative signs” of economic stabilization in the euro area, ECB President Mario Draghi said in Frankfurt yesterday. While “substantial downside risks” remain, he pointed to falling yields on Italian and Spanish debt.

Nigerian labor unions said yesterday they will continue a strike that threatens oil exports from Africa’s top producer because no agreement has been reached yet with President Goodluck Jonathan on restoring fuel subsidies. The unions plan to resume talks with the president tomorrow, Abdulwaheed Omar, president of the Nigeria Labour Congress, told reporters at a press conference in the capital Abuja.

The oil union Pengassan said it would begin shutting down oil output on Jan. 15 if there was no agreement with the government, while its counterpart Nupeng said it has withdrawn its workers from fields operated by companies such as Royal Dutch Shell Plc (RDSA) to back the strike.

Iran Threat

Oil in New York has traded above $100 a barrel every day this year amid Iranian threats to respond to sanctions by shutting the Strait of Hormuz, a transit route for a fifth of the world’s crude. It rose to $103.74, the highest intraday price in almost eight months, on Jan. 4 after the EU said foreign ministers intend to announce harsher sanctions on Iran’s energy and banking industries at their next meeting.

Phasing in the European embargo would satisfy the concerns of countries most dependent on Iranian oil, including Italy, Greece and Spain, the EU official said, declining to be identified because the talks are private. Those three nations accounted for 68.5 percent of EU imports from Iran in 2010, according to European Commission data.

Sanctions, which would need to be agreed on by the foreign ministers of the 27-nation bloc on Jan. 23, are also likely to include an exemption for Italy so crude can be sold to pay off debts to Rome-based Eni SpA (ENI), the nation’s largest oil company, according to the official.

Oil may fall next week on concern that the U.S. economy is slowing, curbing fuel demand in the largest crude-consuming country, a Bloomberg News survey showed.

Fifteen of 30 analysts, or 50 percent, forecast oil will decline through Jan. 20. Ten respondents, or 33 percent, predicted prices will increase and five estimated there will be little change. Last week, 47 percent of surveyed analysts expected a decrease.